Credit card fraud has become worse in recent years. The source of the fraud is primarily due to the leaks of credit card number and other personal information. Although smartcard technology has been introduced for years, it is still not solving the problem due to that the credit card number is still acceptable without requiring digitally signed challenge in an in-store swipe card reader transaction, or an online shopping transaction. The current invention relates to a distributed unpredictable once card number (OCN) generation and validation method and apparatus. The once card number (OCN) can only be used once and will be rejected afterward if the same OCN is used again. This will eliminate majority of credit card number theft fraud due to the leakage of any used once card number (OCN). Furthermore, the validation server used for authenticating the OCN relies on checking if the hashing value of OCN is in a valid OCN hashing list or not. Even the valid OCN hashing list in the server is stolen, that may still take a long computation time for a hacker to recover a valid OCN, thus may dramatically reduce the risk of a centralized secure database attack fraud.
Certain related prior arts exist. For example, Citibank (New York) offered an online service called “Virtual Account Number” which required user to download a virtual number from a central server that can be used only once. The virtual number generator is either downloaded to the user's computer or accessed online. The user needs to return to the PC or website for a new virtual number for a subsequent transaction. Neither the merchant nor a credit card number theft can use the same number after a transaction is conducted. So copying a virtual account number once a transaction is done is like copying a receipt (or a history) that has no purchasing power any more. Therefore the card holder is protected from future fraudulent transaction due to the used virtual number has been recorded as a rejection number. The limitation of Virtual Account Number is that it requires Internet to generate a new number and only protect online transaction. For regular Point-of-Sales, it still uses the magnetic stripe card reader to read out a real account number that continue to be subject to the current credit card number skimming fraud.
Another related prior art disclosed by Kerry D. Brown in U.S. Pat. No. 7,472,829. It described a payment card with internally generated virtual account number (VAN) for its magnetic stripe encoder and user display. The embedded virtual account number generator is capable of generating the VAN autonomously without requiring feedback or other data return from the rest of the system. The payment card can display the VAN for online transaction and can program the magnetic stripe for POS transaction. The VAN will be moved to an exclusion list once it is used. Thus enjoy the security benefits for both online and POS transactions. It is an improvement off Citibank's Virtual Account Number which only covers online transaction security. However, the limitation of Brown's invention is that it relies on a “predictable” pseudo random generator with a provided user secret seed for authentication. Thus it cannot handle offline batch transactions if the card numbers submit are out of orders. Although in the disclosure, it relaxed the out of order sequence to be within 5 sequences. There still might be a chance of a valid batch transaction if 6 or more sequence away. Thus this renders Brown's approach not practical for offline transaction. Furthermore, once the secure central database of users' secret seeds been stolen, then the hacker can automatically generate sequence of all valid VANs without alerting the system. That is, Brown's invention is still vulnerable to a centralized secure database attack fraud.